Predatory Lending and the Shell Game of Securitization …. The Mob would be ashamed

I. PREDATORY LENDING DEFINED Predatory lending is a syndrome of loan abuses that benefit mortgage brokers, lenders, and securitizers to the serious detriment of borrowers.  Such abuses include the following: (1) Loans structured to result in seriously disproportionate net harm to borrowers: A major example is asset-based lending, which consists of loans to borrowers whom the lender knows cannot afford the monthly payments. Pushing borrowers to take on more debt than they need, steering prime-eligible borrowers to subprime loans, and refinancing low-interest loans into costlier loans with no justification can also inflict seriously disproportionate net harm on borrowers.

  Some servicers have employed abusive servicing practices, including charging unjustified fees, actively pushing borrowers into default, and employing exploitative collection methods.
  I. PREDATORY LENDING DEFINED
   (1)  Predatory lending is a syndrome of loan abuses that benefit mortgage brokers, lenders, and securitizers to the serious detriment of borrowers.  Such abuses include the following: (1) Loans structured to result in seriously disproportionate net harm to borrowers: A major example is asset-based lending, which consists of loans to borrowers whom the lender knows cannot afford the monthly payments. Pushing borrowers to take on more debt than they need, steering prime-eligible borrowers to subprime loans, and refinancing low-interest loans into costlier loans with no justification can also inflict seriously disproportionate net harm on borrowers.
  (2) Loans involving illegal fraud or deception: Many predatory loans involve fraud or deception by brokers or lenders. For example, brokers or lenders may procure inflated appraisals or make false promises to refinance loans down the road on better terms.
  SEE …  Dep’t of Hous. and Urban Dev. & -Dep’t of the Treasury Task Force on Predatory Lending, Curbing Predatory Home Mortgage Lending 24, 79-80 (2000) [hereinafter Treasury-HUD Report]

Curbing Predatory Home Mortgage Lending | HUD USER

 

Jun 1, 2000 – Based on information gathered at five field forums by the joint HUD-Treasury Task Force on Predatory Lending, the report, Curbing Predatory …

HUD, Treasury Release Joint Report Recommending Actions To Curb …

 

Jun 20, 2000 – Predatory lending practices should have no place in the subprime market, or any other market.” … Task Force on Predatory Lending, the report, “Curbing Predatory Home Mortgage Lending,” proposes a four-point plan to …

Curbing Predatory Home Mortgage Lending | HUD USER

Jun 1, 2000 – Prohibit Harmful Sales Practices in the Mortgage Market. Practices such as loan “flipping” and lending to borrowers without regard to their ability to repay the loan should be banned. … Restrict Abusive Terms and Conditions on High-Cost Loans.

HUD, Treasury Release Joint Report Recommending Actions To Curb …

Jun 20, 2000 – Based on information gathered at five field forums by the joint HUD-Treasury Task Force on Predatory Lending, the report, “Curbing Predatory …

[PDF]

HUD-Treasury Report Recommendations to Curb Predatory Home …

the HUD-Treasury National Predatory Lending Task Force. Secretary Cuomo ….. curb predatory lending, and (2) not unduly inhibit the flow of credit to subprime.

The impact of local predatory lending laws on the flow of subprime …

by G Ho – ‎2006 – ‎Cited by 93 – ‎Related articles

Empirical results show that the typical local predatory lending law tends to reduce … [15]: HUD-Treasury,Curbing Predatory Home Mortgage Lending, United …

Predatory Lending – HUD

lobby.la.psu.edu/_107th/105_Predatory_Lending/…/HUD/HUD_PredatoryLending.ht…
Nov 22, 2002 – Predatory lending strips borrowers of home equity and threatens families … HUD is taking an active role in curbing predatory lending practices.

 

Administration Announces Additional Protections For Homebuyers To .

lobby.la.psu.edu/_…Predatory_Lending/…/MBAA_HUD_Proposals_08092002.htm

Aug 9, 2002 – … Additional Protections For Homebuyers To Curb Predatory Lending Martinez Demands Increased Accountability from FHA Lenders through …

[PDF]

Predatory Lending – Federal Reserve Bank of Boston

lawmakers proposed additional protections to curb abu- sive lending practices; Georgia’s predatory lending law …. ses.3 HUD cautions against assuming.

Property Flipping Deemed Predatory Lending: HUD Pronounces …

… accountability on mortgage lenders and curb perceived predatory lending practices. The Final Rule reflects these efforts, as well as HUD’s continuous struggle …

HUD to Seek Predatory Loan Ban for Fannie Mae, Freddie Mac – The …

Apr 10, 2000 – HUD to Seek Predatory Loan Ban for Fannie Mae, Freddie Mac … Fannie Mae and Freddie Mac already are moving to curb predatory lending.

“Predatory Lending and Mortgage Fraud” – Foodman CPAs and Advisors

https://foodmanpa.com › Articles › Advisory Services

 

Local Predatory Lending Laws: Going Beyond North Carolina

https://www.stlouisfed.org › Publications › Bridges › Fall 2005
by DP Lending – ‎2005 – ‎Related articles
However, the impact of these local predatory lending laws on the subprime … Housing and Urban Development (HUD)-Treasury report, defining predatory lending can …. to curb predatory and abusive lending in the subprime mortgage market.
 

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The Impact of Local Predatory Lending Laws – Amazon AWS

real.stlouisfed.org.s3.amazonaws.com/wp/2005/2005-049.pdf
by G Ho – ‎2005 – ‎Cited by 19 – ‎Related articles
HUD and Treasury published an influential report in 2000 entitled “Curbing Predatory … The HUD-Treasury report defines predatory lending as that involving …

Guidance on Federal Home Loan Bank Anti-Predatory Lending Policies

Aug 25, 2005 – Predatory lending practices that erode homeowners’ equity in their homes … adopted restrictions aimed at curbing predatory mortgage practices by the … The FHLBanks must also reviewHUD’s regulation on the types of loans …

[PDF]

FTC Statement Before the Federal Reserve System Concerning …

Sep 7, 2000 – Predatory Lending Practices in the Home-Equity Lending Market …. the allegations brought by DOJ and HUD, the Commission alleged that Delta had …. of Treasury and Housing and Urban Development, in Curbing Predatory.

testimony of allen j. fishbein director for housing and credit policy …

Nov 5, 2003 – Predatory lending – exploitative lending to financially …. Department/HUD report, CurbingPredatory Home Mortgage Lending (June, 2000),.

The Watchdog That Didn’t Bark: The Financial Crisis and the …

Dean Starkman – 2014 – ‎Language Arts & Disciplines

HUD-Treasury Task Force on Predatory Lending, “Curbing Predatory Home Mortgage Lending,” http://archives.hud.gov/reports/treasrpt …

[PDF]

How the Household Settlement Uncorked a Law Enforcement …

by S Peacock – ‎Cited by 2 – ‎Related articles
that these forms of law enforcement have failed to curb predatory lending sufficiently. … The HUD task force explains that many subprime borrowers who were
     Apparently, because federal legislation to curb predatory lending practices has not materialized, HUD  efforts to stop predatory practices in the mortgage industry …
 

HUD, TREASURY RELEASE JOINT REPORT RECOMMENDING …

Based on information gathered at five field forums by the joint HUD-Treasury Task Force on Predatory Lending, the report, ” Curbing Predatory Home Mortgage …

HUD to Focus on Predatory Lending – AP News

Mar 31, 2000 – The Maryland Democrat asked why predatory lending is becoming a … The task forcewill focus on unscrupulous home lending patterns in a …

[PDF]

HUD-Treasury Report Recommendations to Curb Predatory Home …

the HUD-Treasury National Predatory Lending Task Force. … HUD-Treasury Task Force forums demonstrates, however, the subprime market can be fertile …

Notice of Public Forums and Establishment of HUD Task Force on …

Jump to I. HUD’s Views on Predatory Lending Practices – Predatory lending abuses inflate real estate settlement costs, involve high interest …

– PREDATORY LENDING – Government Publishing Office

45 Baltimore Predatory Lending and Flipping Task Force Year One Accomplishments. …. Three, HUD and the task force have revised the scope to include any …

HUD announces effort to curb predatory lending – tribunedigital …

articles.baltimoresun.com/…/0003310141_1_predatory-lending-subprime-lending-prop…
HUD announces effort to curb predatory lending. Task force to help create bill will include 3 from Baltimore nonprofit groups. March 31, 2000|By John B.

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Predatory Lending Questions and Answers – City of San Jose

www3.sanjoseca.gov/clerk/Agenda/05_25_04docs/05_25_04_4.4.attA.pdf
1) What is the difference between subprime lending and predatory lending? ….. In forums the HUD-Treasury Task Force on Predatory Lending held in 2000 in …

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Predatory Lending – Federal Reserve Bank of Philadelphia

Development (HUD) has set up a. Predatory … national task force on the topic. … Who Does Subprime or Predatory. Lending? Subprime lending tends to be.

The practice of predatory lending is becoming more common in the mortgage industry today. As a home buyer, you need to watch out for some of the signs of predatory lending. Here are a few of the most common examples of predatory lending practices.

PREDATORY LOAN PRACTICES …..  What to look for

1. Emphasizing the Payment

One of the most common tactics that is used by predatory lenders is emphasizing the monthly payment instead of the other factors of the loan. There are all kinds of ways that a lender can manipulate the monthly payment to get it within your budget. This means that you should not be paying as much attention to the monthly payment as you should the other factors of the loan. You could potentially be signing up or something that devastates you financially just so that you can get a cheaper monthly payment for a while.

2. Balloon Loans

Another common predatory lending practice is the use of balloon loans. Balloon loans provide borrowers with a small monthly payment for the majority of the loan. However, the borrower is only making a payment to cover the monthly interest in most cases. This means that the principal of the loan is never addressed until the last payment. You will have to make one large balloon payment in order to retire the principal of the loan. Most of the time, no one prepares for this payment and basis foreclosure on their home.

3. Packing

Another predatory lending practices referred to as packing. This is when the lender packs extra things in with the loan without your knowledge. This is commonly done with insurance products that are not necessary to you. You will end up paying more for these products and they will not benefit you in anyway.

4. Excessive Points and Fees

Sometimes lenders will charge excessive points and fees on their loans in an attempt to bring in some more profit. One point is typically equal to one percent of the loan balance. These are typically used tobuy down the interest rate on the mortgage. If a lender is asking you for more points than normal, this could be considered predatory lending. Many lenders will also pack in extra closing costs that are completely unnecessary as well. Watch out for these extra fees when you are working with a lender. Typically, you should be provided with a good-faith estimate within three days of applying for a loan. You should be able to look at this good-faith estimate and decide if the fees are honest or not.

5. Large Mortgage Broker Payment

Some individuals choose to work with a mortgage broker in order to find the best deal on a mortgage. There is nothing wrong with using amortgage broker as they can sometimes be very beneficial. However, in some cases lenders will make an excessive payment to these mortgage brokers. This is done so that the mortgage broker will be influenced to bring customers to the lender. This is a disservice to the customers of the mortgage broker and it can get you in trouble with a loan that is not in your best interest.

 See, e.g., David Gray Carlson, The Rotten Foundations of Securitization, 39 Wm. & Mary L. Rev. 1055 (1998); 

Christopher W. Frost, Asset Securitization and Corporate Risk Allocation, 72 Tul. L. Rev. 101 (1997); 

Edward J. Janger, Muddy Rules for Securitizations, 7 Fordham J. Corp. & Fin. L. 301 (2002); 

Lynn M. LoPucki, The Death of Liability, 106 Yale L.J. 1 (1996); 

Lois R. Lupica, Asset Securitization: The Unsecured Creditor’s Perspective, 76 Tex. L. Rev. 595 (1998); 

Steven L. Schwarcz, Intermediary Risk in a Global Economy, 50 Duke L.J. 1541, 1580-81, 1585-86 (2001). 2. Kurt Eggert was among the first to discuss this issue, in the context of the holder-indue-course rule. Kurt Eggert, Held Up in Due Course: Predatory Lending, Securitization, and the Holder in Due Course Doctrine, 35 Creighton L. Rev. 503 (2002). 

Jonathan Remy Nash also highlighted this issue in his work on securitization and environmental super liens. Jonathan Remy Nash, Environmental Super liens and the Problem of Mortgage-Backed Securitization, 59 Wash. & Lee L. Rev. 127 (2002). 

Other works have examined securitization’s effect on third-world countries. See Carl S. Bjerre, Project Finance, Securitization and Consensuality, 12 Duke J. Comp. & Int’l L. 411, 434-35 (2002); 

Anupam Chander, Odious Securitization, 53 Emory L.J. 923 (2004); Tamar Frankel, Cross-Border Securitization: Without Law, But Not Lawless, 8 Duke J. Comp. & Int’l L. 255, 260, 265 (1998); 

David W. Leebron, First Things First: A Comment on Securitizing Third World Debt, 1989 Colum. Bus. L. Rev. 173.  

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